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Colorado Salesperson License Info

This Information Current as of 1998

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Table of Contents

Clicking on a Table of Contents Listing Will Take You to That Section

Part One:  General Licensing Information

Motor Vehicle Board
Motor Vehicle Dealer Section
Testing Requirements
License Types and Requirements
Surety Bonds
New Vehicle Dealer
Used Vehicle Dealer
Wholesaler
License Requirements for Dealers and Wholesalers
Liability Insurance Requirements
Grounds for Denial of Dealer's/Wholesaler's License
Requirements of Dealers
Off Premise Selling
Principal Place of Business
Sign in Licensed Name
Motor Vehicle Sales Person
Salesperson Licensing Requirements
Grounds for Denial of Salesperson's License
Changing Dealerships
Multiple Dealerships/Licenses
Buyer Agent

Part Two:  New Vehicles

Motor Vehicle
New Vehicle
Manufacturer's Certificate of Origin
Monroney Label
Supplemental Dealer Label
Transfer of Title - New Vehicles
Disclosures Required as Part of a Motor Vehicle Sales Contract

Part Three: Used Motor Vehicles

Used Motor Vehicles
FTC Buyer's Guide
Transfer of Title - Used Vehicles
Lease Vehicles
Advertising of Lease Vehicles

Part Four: Advertising

General Information
Inclusion of Dealer Name
Bait & Switch
Truth in Lending

Part Five: Title, Plates & Registration Permits

Title Law
Salvage Certificate of Title
Mechanics Lien
Possession Documents
Dealer Plates
Full Use Plates
Demonstrator Plates
Rules Governing Use of Dealer Demo Plates
In-Transit Plates
Depot Plates
Temporary Permits
Return of Plates to Customer

Part Six: Related Federal & State Laws

Truth in Mileage Act
A Secure Power of Attorney Form
Cash Reporting Rule
Canceling a Contract in 72 Hours
"As Is" & "Tow Away"
Deceptive Trade Practices
Disclosure Required
Emissions
Financing Approval
Colorado Lemon Law
Motor Vehicle Repair Act
Repossession
Sunday Closing Law
Unlicensed Dealer or Salesperson  

 

Part 1: General Licensing Information

Motor Vehicle Dealer Board

The industry was first regulated in 1945. The Motor Vehicle Dealer Board was created by the Colorado General Assembly in 1971. The Board consists of nine members who have been residents of the state for at least five years: three licensed new vehicle dealers, three licensed used vehicle dealers, and three members from the public at large. The public members cannot have a present or past financial interest in a motor vehicle dealership. All of the members are appointed by the Governor for three-year terms

The Board is empowered to promulgate, amend and repeal reasonable rules, regulations and provisions for governing the industry.

The Board can issue or deny license applications for any motor vehicle dealer, used dealer, wholesaler, wholesale auction dealer or salesperson. It can investigate any alleged or suspected violation by any dealer, wholesaler, wholesale auction dealer or salesperson. The Board can order an administrative hearing when it believes there is probable cause that a violation of law occurred. It can also suspend and revoke the license of any motor vehicle dealer, wholesaler, wholesale auction dealer or salesperson after giving due notice and conducting an administrative hearing. The Board may also impose a fine of up to $10,000 for each separate offense.

The Board is authorized to determine license fees.

The Board meets monthly to transact normal business, review new applications and conduct hearings.

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Motor Vehicle Dealer Section

The Dealer Section in the Motor Vehicle Division acts as the administrative an-n of the Motor Vehicle Dealer Board in the licensing and regulation of motor vehicle dealers, used motor vehicle dealers, wholesalers, wholesale auto auctions, and salespersons. Activities include processing of license applications and fees, overseeing and auditing the written examination process, providing educational services to licensees and the public, working with consumers and licensees to resolve problems and investigating complaints.
The Dealer Section also issues licenses to and regulates motor vehicle manufacturers, distributors, factory branches, representatives and buyer agents for the Director of the Department of Revenue.

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Testing Requirements

In accordance with state law all applicants must pass a written examination. The examination is an open book Mastery Exam. The applicant must score 100% on the exam.

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License Types & Requirements

All licenses, New and Used Dealer, wholesale auction dealer, buyer agent and salesperson) expire annually and must be renewed on or before the expiration date.

Each dealer, and salesperson license is to be posted in a conspicuous place in the dealer's place or places of business.

Each license is separate and distinct. It is a violation of law for any person to exercise any of the privileges granted under a license that such person does not hold, or for any licensee to knowingly allow such an exercise of privileges by someone else. For example, a person licensed as a wholesaler cannot sell a vehicle to a retail customer. A wholesaler involved in such a sale would be illegally exercising the privileges of a used dealer.

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Surety Bonds

Surety bonds protect citizens against illegal acts by licensees. For instance, consumers could file a claim against a bond if a dealer failed to deliver title or did not honor a written agreement.

Bonds must remain in force throughout the licensed period. Similar to the license renewal process, bonds are renewed annually with the license renewal. The renewal may be done through a continuation certificate issued by the bond company.

New and used vehicle dealers, wholesalers, and wholesale auction dealers are required to have bonds in the amount of $30,000. Salespersons, small trailer dealers and buyer agents are required to have bonds in the amount of $5,000.

If someone suffers loss or damage because of fraud or fraudulent representation made by a licensed dealer or one of the dealer's salespersons, that person can file a claim or civil suit against the dealer, the salesperson and the surety companies that bonded them. The right of a person to recover for loss or damage against the dealer or the salesperson is not limited to the amount of their bonds. In other words, the dealer or salesperson can be, personally liable for any proven claim or judgment in excess of the bond. Also, if a surety pays out against a claim they will seek reimbursement from the licensee.

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New Motor Vehicle Dealer

A new motor vehicle dealer is any person who, for commission or with intent to make a profit or gain of money or other thing of value, sells, exchanges, rents with option to buy, offers or attempts to negotiate a sale or exchange of an interest in new or used vehicles. A dealer includes anyone engaged entirely or partially in the business of selling motor vehicles, whether or not such vehicles are owned by that person. Selling 3 or more new or new and used vehicles, or offering for sale more than 3 vehicles at the same address or telephone number in any one calendar year shall be prima facie evidence (evidence at face value) that a person is engaged in the business of selling motor vehicles. A new motor vehicle dealer includes any owner of real property who allows more than 3 new or new and used vehicles to be offered for sale on such property during I calendar year unless the property is leased to a licensed dealer. New motor vehicle dealer does not include:

1. Receivers, trustees, administrators, executors, guardians or other persons appointed by or acting under the order of any court.

2. Public officers performing their official duties.

3. Employees of dealers.

4. Wholesalers.

5. Persons engaged in the selling of a new fire truck.

6. Motor vehicle auction dealers.

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Used Motor Vehicle Dealer

A used motor vehicle dealer is any person who, for commission or with intent to make a profit or gain of money or other thing of value, sells, exchanges, leases, or offers an interest in used motor vehicles, or attempts to negotiate a sale, exchange, or lease of used motor vehicles. A used dealer is also someone who is engaged totally or in part in the business of selling used motor vehicles, whether or not such vehicles are owned by such person. Selling 3 or more vehicles, or offering for sale more than 3 vehicles at the same address or phone number in any I calendar year, shall be prima facie evidence that a person is in the business of selling used vehicles. A used motor vehicle dealer includes any owner of real property who allows more than 3 used motor vehicles to be offered for sale on such property during I calendar year unless the property is leased to a licensed dealer or auctioneer. Used motor vehicle dealer does not include:

1. Receivers, trustees, administrators, executors, guardians or other persons appointed by or acting under the order of any court.

2. Public officers performing their official duties.

3. Employees of used motor vehicle dealers.

4. Wholesalers.

5. Lending institutions, such as banks or finance companies, which sell no more than 12 repossessed vehicles in any one year. (The lending institutions or secured parties shall not realize any moneys in excess of the outstanding balance secured by the loan or security agreement, plus costs of collection.)

6. Persons who sell or exchange no more than 4 motor vehicles that are collector's items as defined in Colorado law.

7. Motor vehicle auction dealers.

8. Tow company operators.

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Wholesaler

A wholesaler is a person who for commission or with intent to make a profit or gain of money or other thing of value, sells, exchanges, offers or attempts to negotiate a sale or exchange of an interest in new or used vehicles only to dealers, auction dealers, and other wholesalers. No person can hold both a wholesaler's and a motor vehicle salesperson's license at the same time. A wholesaler CANNOT employ salespeople.  A wholesaler CANNOT be licensed or conduct business in his or her personal name.

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Licensing Requirements for New and Used Motor Vehicle Dealers and Wholesalers

1. A complete application submitted no later than the 15th of the month to be considered at the regularly scheduled meeting of the Dealer Board the following month. The complete application includes:

The original application (DR 2109)

The addendum DR 2109-B)

Financial statement (DR 2114) and supporting documents

Partnership agreements or articles of incorporation or organization

Place of business affidavit (DR 2044)

Dealer plate affidavit (DR 2630)

Proof of state sales tax license, or completed application (CR 100)

The payment of the appropriate fees.

A passing score of 100% on the mastery exam.

A $30,000 surety bond on the approved form. The applicant's name and DBA must appear exactly as licensed. It must be signed by the owner, a partner, an officer of the corporation or LLC manager.

If applying for a franchised license, a franchise agreement on manufacturer's letterhead.

Mail or carry the application, fee (check payable to the Colorado Department of Revenue), proof of passing exam score and bond to: Dealer Section, State Motor Vehicle Division, Denver, CO 80261- 0016.

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Liability Insurance Requirement

Motor vehicles cannot be operated on public highways in Colorado unless the vehicle owner has insurance or a certificate of self-insurance in full force. Dealers must either be self-insured or have insurance for their vehicles. Owners of motor vehicles cannot operate a vehicle on public highways or allow their vehicles to be operated on public highways unless there is a complying insurance policy or certificate of self- insurance in full force.

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Grounds for Denial, Revocation or Suspension of a Dealer's or Wholesaler's License

The license of a new or used dealer, wholesale auction dealer, or wholesaler may be denied, suspended, revoked or fined for the following:

1. Unfitness of character or record of a licensee or applicant relating to licensing, criminal or financial history or current status.

2. Making a material misstatement in an application for license.

3. Violating any of the terms and provisions of dealer law or Board rules or regulations.

4. Having been convicted of or pled nolo contenders to any felony or any crime pursuant to article 3, 4, or 5 of Title 18, C.R.S. (felony or criminal misdemeanor), or like crime pursuant to federal law or the law of any other state. A certified copy of the judgment of conviction by a court of competent jurisdiction shall be conclusive evidence of such conviction. A dealer, 'wholesaler, or officer/director/ stockholder of a corporation, or LLC member/manager who is convicted of any felony or any crime, must give the Board written notice of such conviction within 30 days after receiving final judgment. The licensee is responsible for providing complete information including copies of final judgments and pre-sentence reports.

5. Defrauding any buyer, seller, salesperson or financial institution to such person's or institution's damage.

6. Failing to perform - either intentionally or negligently - any written agreement with any buyer or seller.

-A dealer must give written notice of acceptance or rejection of a purchase order or agreement to the buyer within I working day on a cash deal, 3 working days on a consignment sale, or 5 working days on a finance deal. When a purchase order or agreement is subject to a dealer's acceptance, the order or agreement shall state this in a conspicuous manner.

-The selling price of a motor vehicle cannot be increased after the contract has been accepted by the dealer unless otherwise specified on the contract.

-A dealer must clearly indicate on the customer's contract when a motor vehicle is sold 'as is' and without a warranty, or as a "tow away" , not to be driven.

-A check or draft by a purchaser or dealer is considered a written agreement.

7. Failing or refusing to furnish and keep in force any required bond.

8. Making a fraudulent or illegal sale, transaction or repossession.

9. Willfully misrepresenting, circum- venting, concealing or failing to disclose through whatever deception or device, any of the material particulars required to be stated or furnished to the buyer. A copy of the completed contract form and all other forms and documents required by law shall be given to the purchaser at the time of consummation of the sale of a motor vehicle. A dealer or wholesaler shall disclose on the contract form when a motor vehicle is known by the dealer or wholesaler to have been rebuilt from salvage or has sustained any damage.

10. Intentionally publishing or circulating any advertising which is misleading or inaccurate in any material particular or which misrepresents any motor vehicle products sold or furnished by a licensed dealer.

11. Knowingly purchasing, selling, acquiring or disposing of a stolen motor vehicle.

12. Engaging in the business of a new or used dealer without maintaining at all times a principal place of business during reasonable business hours.

13. Employing an unlicensed salesperson.

14. Willfully violating any state or federal laws respecting commerce or motor vehicles or any rules or regulations respecting commerce or motor vehicles adopted by any licensing or regulating authority pertaining to motor vehicles.

15. Representing or selling as 'new' any motor vehicle that the dealer knows is a used motor vehicle.

16. Violating any state or federal statute or regulation dealing with odometers.

17. Selling to a retail customer a vehicle which is not equipped or in proper condition and adjustment unless such vehicle is sold as a 'tow away', not to be driven.

18. Committing a fraudulent insurance act.

A wholesaler's or wholesale auction dealer's -license may also be denied, suspended or revoked for selling, offering, or attempting to negotiate the sale or exchange of an interest in motor vehicles to persons other than new or used dealers, wholesalers or wholesale auction dealers.

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Requirements of Dealers

-Any transfer to an individual of 10% or more of the stock or ownership interest in any corporation or limited liability company holding a license must be reported to the Board immediately.

-Any change in the name or trade name of the business must be reported by submitting a written notice to the Board at least 10 days prior to the change.

-Any change in operating entity of a licensee shall require a new application, fee and approval-by the Board. A change of entity means a change of business type - i.e., from a proprietor, partnership or corporation to a different proprietor, partnership or corporation.

-Any change in the site or location of a principal place of business shall immediately be reported to the Board in writing.

-Any change, addition, cancellation or loss of a franchise shall immediately be reported to the Board.

-Any time a salesperson is discharged or leaves a dealership, that dealer must immediately return that person's license to the Board. It is unlawful for that person to act as a salesperson, until he or she is employed at another dealership and a Change of Employer Notification has been submitted to the Board.

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Off-Premise Selling

A dealer shall obtain an off-premise permit to offer, display and sell motor vehicles away from the dealer's licensed place of business. A completed Off-Premise Permit Application (DR 2043) must be submitted along with the fee prior to the event and shall list the location and date(s) of the sale. The permit shall be available for inspection at the sale. No off-premise sales shall exceed six days, except for the National Western Stock Show, the Colorado State Fair, and the Metro Denver Auto Dealers Association's annual Denver Auto Show. The permits for these 3 events cannot exceed 20 days. Consecutive permits for the same location are not allowed. Off-premise permits do not negate the Sunday Closing Law.

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Principal Place of Business and Reasonable Hours Requirements

'Principal place of business' means a site or location devoted exclusively to the business for which a dealer is licensed and businesses incidental thereto. It must have enough space to permit the display of one or more new or used vehicles and have a permanent enclosed building or structure large enough to accommodate the dealer's office and provide a safe place to keep the books and records of the business. The books and records of each dealer, excluding financial statements and tax returns, shall be open to inspection Monday through Friday between 9 AM and 5 PM by the Board and its agents and representatives with cause, including ongoing investigation, compliance audit, sworn complaint, and order of the Board. All records, including financial records and tax returns, shall be provided to the Board upon a subpoena for those records.
All new and used motor vehicle dealers must be open for business at least 3 days per week for a continuous period of time not less than 4 hours per day between the hours of 8 AM and 9 PM. Any dealership open less than 40 hours a week must post a clear and legible sign on its place of business indicating the days and hours that it is open for business. In addition, such dealers shall notify the Board in writing of such hours and any subsequent changes.
Any dealership which will not be open for business for a period of at least 2 weeks must post a clear and legible sign on its place of business indicating this fact as well as notifying the Board in writing.

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Sign In The Licensed Name

The principal place of business and additional locations of the dealer shall display a permanent sign with letters at least 6 inches high, clearly visible to the major avenue of traffic. The sign shall clearly display the licensed name of the business.

Other Location Requirements

The building or structure required to be on the principal place of business shall have electrical service and adequate sanitary facilities. 'Adequate sanitary facilities" means a permanent sewer hookup, cesspool or septic tank with leaching field, or portable chemical toilet.

-The site must comply with all local zoning ordinances.

-In most cases, a room in a hotel, rooming house, apartment structure or part of any single or multiple unit dwelling cannot be considered a principal place of business, unless the entire ground floor is devoted principally to and occupied for commercial purposes. The office of the dealer must be located on the ground floor.

-A dealer's license can be suspended or revoked if the principal place of business or additional locations are not owned or leased by and not actually occupied by the licensed dealer.

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Motor Vehicle Salesperson

Motor vehicle salesperson means any natural person who, for a salary, commission or compensation of any kind, is employed either directly or indirectly, regularly or occasionally, by any new or used dealer to sell, purchase, or exchange or to negotiate for the sale, purchase or exchange of motor vehicles. This includes general managers, sales managers and finance or insurance agents who sell or approve retail sales of motor vehicles.

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Motor Vehicle Salesperson Licensing Requirements

1. A complete application must be submitted.

2. The payment of the appropriate fee.

3. A passing score of 100% on the mastery exam.

4. A $5,000 surety bond on the approved form.

5. Mail or carry the application, fee (check payable to the Colorado Department of Revenue), proof of passing exam score and bond to: Dealer Section, State Motor Vehicle Division, Denver, CO 80261- 0016.

Salespersons are not allowed to offer, negotiate or sell vehicles unless applications, complete in every respect, bonds, fees and records of satisfactory completion of written examinations have been submitted to the Board. Postmark or date/time stamp shall be evidence of submission. Any person who has been the subject of disciplinary proceedings before the Board within the past 5 years shall not start selling or negotiating until the Board has reviewed and approved the application.

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Grounds for Denial, Revocation or Suspension of a Motor Vehicle Salesperson's License

The license of a motor vehicle salesperson may be denied, suspended, revoked or fined for the following:

1. Unfitness of character or record of licensee or applicant relating to licensing, criminal or financial history or current status.

2. Making a material misstatement on an application for license.

3. Failure to comply with any provision of dealer law or any rule or regulation adopted by the Board.

4. Engaging in the business without having a bond in force.

5. Intentionally publishing or circulating any advertising that is misleading or inaccurate in any material particular or which misrepresents any motor vehicle products sold or attempted to be sold by such salesperson.

6. Engaging in any fraudulent business practice.

7. Selling, offering, or attempting to negotiate the sale or exchange of motor vehicles for any dealer for which a salesperson is not licensed.

8. Representing oneself as a salesperson for any dealer when not so employed or licensed.

9. To have been convicted of or pled nolo contenders to any felony or any crime pursuant to article 3, 4 or 5 of Title 18, C.R.S. (felony or criminal misdemeanor), or like crime pursuant to federal law or the law of any other state. A certified copy of the judgment of conviction by a court of competent jurisdiction shall be conclusive evidence of such conviction in any hearing. A salesperson who is so convicted, must give the Board written notice of such conviction within thirty (30) days after receiving final judgment of the court. Licensee is responsible for providing complete information including copies of final judgments and pre-sentence reports.

10. To have knowingly purchased, sold or otherwise acquired or disposed of a stolen motor vehicle.

11. Employing an unlicensed salesperson.

12. Violating any state or federal statute or regulation dealing with odometers.

13. Defrauding any retail buyer to that person's damage.

14. Representing or selling as 'new' any motor vehicle that the salesperson knows is a used motor vehicle.

15. Selling to a retail customer a vehicle which is not equipped or in proper condition and adjustment, unless such vehicle is sold as a tow away, not to be driven.

16. Willfully violating any state or federal law respecting commerce or motor vehicles or any lawful rule or regulation respecting commerce or motor vehicles adopted by any licensing or regulating authority pertaining to motor vehicles.

17. Improperly withholding, misappropriating, or converting to one's own use any money belonging to customers or other persons, received in the course of employment as a motor vehicle salesperson.

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Changing Dealerships

A salesperson may change dealerships during the licensing year. A Change of Employer Notification form must be completed and signed by the dealer and the salesperson and submitted to the Dealer Section. The Change of Employer Notification is found on the back of the salesperson license. A salesperson must have a current bond on file for the license to issue. There is no fee to change employers. The salesperson may begin selling as soon as the completed transfer form is submitted to Dealer Section, unless the applicant has been the subject of disciplinary proceedings before the Dealer Board within the last 5 years. It is unlawful for such salesperson to act as a motor vehicle salesperson until a new license is procured.

Dealers are responsible for their sales staff when a salesperson leaves a dealer, that dealer must confiscate the license and return that salesperson's license to the Dealer Section. A new bond is not required when a salesperson changes dealerships during the license year.

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Multiple Dealerships/Additional Licenses

Salespersons may work for more than one dealership. However, a separate application, bond and fee must be submitted for each dealership. Employing dealers need to check the 'Additional License' box on the Salesperson Application (DR 2115). Each -Additional License' application must be completely filled out. Each employing dealer must be aware of the salesperson's employment at other dealerships.

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Buyer Agent

A buyer agent is any person who is retained or hired by a consumer for a fee or other thing of value to assist, represent, or act on behalf of that consumer in purchasing or leasing a motor vehicle. Buyer agents are licensed by the Director of the Department of Revenue.

A $5,000 surety bond is required of all buyer agents. It must be on a form approved by the Colorado Attorney General. All bonds must be renewed annually. The renewal may be done through a continuation certificate issued by the surety.

It is unlawful for buyer agents to:

1. Make a material misstatement on an application for a license.

2. Willfully fail to perform any written agreement.

3. Defraud any buyer, seller, motor vehicle salesperson, or financial institution.

4. Intentionally enter into a financial agreement with a seller of motor vehicles for the buyer agent's own benefit.

5. Coerce any motor vehicle dealer into providing installment financing with a specified financial institution.

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New Vehicles New vehicle means any motor vehicle being transferred for the first time from a manufacturer or dealer. It has not been used and is what is commonly known as .new' and is still on a Manufacturer's Certificate of Origin (MCO). Vehicles having a gross vehicle weight rating of 16,000 lbs. or more are exempt from this definition. A vehicle used by a dealer for demonstration purposes is considered to be a new vehicle until such demonstration use has exceeded 1500 miles. Verifiable in-transit miles are not included in the 1500 demonstration mile limitation. In-transit miles must be carefully documented in a dealer-signed affidavit. A new vehicle can only be sold by a Colorado licensed new motor vehicle dealer that is franchised by that vehicle's manufacturer. New vehicles may be exchanged between dealers franchised to sell the same make of vehicle. Only wholesalers or new vehicle dealers franchised by manufacturers to sell their motor vehicles will be allowed to sell new motor vehicles, and only then if they have not previously been sold except by the manufacturer to such dealer. All vehicles that do not qualify as 'new' are considered used. BACK TO TOP OF PAGE Manufacturer's Certificate of Origin
(MCO)
This document is required from a manufacturer for each vehicle produced. It specifies the vehicle make, model, body type, date of manufacture, or date of transfer from manufacturer, model year, shipping weight, 17-character Vehicle Identification Number (VIN), and manufacturer's invoice number. If the vehicle is a truck or commercial vehicle, the gross weight rating is also specified. The number of cylinders of the engine and the S.A.E. horsepower rating are included when the vehicle is self-propelled. The MCO provides space for the name and address of the dealer to whom the vehicle is being transferred and an assignment form for transfer from dealer to buyer. The assignment forms have a place for the notation of lien information. Mao’s must be printed on authorized secure banknote paper. BACK TO TOP OF PAGE Monroney Label BACK TO TOP OF PAGE Supplemental Dealer Label
(Dealer Addendum)
BACK TO TOP OF PAGE Transfer of Title - New Vehicles The buyer of a new vehicle must be given: -Manufacturer's Certificate of Origin assigned to the purchaser and Dealer's Bill of Sale if all the assignments are full BACK TO TOP OF PAGE Disclosures Required as Part of a Motor Vehicle Sales Contract OR Dealer has agreed to arrange financing for you and you agree to buy the motor vehicle if financing-can be arranged at an interest rate that does not exceed % annual percentage rate. This annual percentage rate must-be agreed upon by both you and the dealer. Also, you are entitled by law to a complete, written disclosure of all the loan terms and the contract is not binding until you receive such a disclosure and accept the loan terms disclosed. BACK TO TOP OF PAGE Used Motor Vehicles BACK TO TOP OF PAGE FTC Buyer's Guide Since 1985, the Federal Trade Commission's Used Car Rule has required that dealers prominently and conspicuously display the 'Buyer's Guide' on every used car or light truck offered for sale. 'Vehicle' includes all motorized vehicles with a gross vehicle weight of under 8,500 lbs., a curb weight under 6,000 lbs., and less than 46 square ft. of frontal area. Motorcycles are excluded. Rule highlights include: BACK TO TOP OF PAGE Transfer of Title - Used Vehicles BACK TO TOP OF PAGE Lease Vehicles BACK TO TOP OF PAGE Advertising of Lease Vehicles

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Advertising BACK TO TOP OF PAGE Advertisement - Inclusion of Dealer Name. BACK TO TOP OF PAGE Bait & Switch Advertising BACK TO TOP OF PAGE Truth In Lending Act BACK TO TOP OF PAGE Title Law

'Dealer Resale' titles do not require sales tax to be paid. A dealer resale title cannot be obtained on any vehicle subject to any lien. Any licensed Colorado dealer or wholesaler may obtain a 'quick' title in the licensed name of the dealership or wholesaler.

Vehicles titled out-of-state do not require the dealer to obtain a Colorado Certificate of Title as long as the title does not prohibit separate reassignments. The first Colorado dealer must complete the 'Verification of VIN' (DR 2087) and "Colorado Dealers Statement Concerning an Out-of-State Vehicle" (DR 2418). BACK TO TOP OF PAGE Salvage Certificate of Title This document is issued by the State Motor Vehicle Division to indicate ownership of a salvage vehicle. A salvage vehicle is one that has been damaged by collision, fire, flood, accident, trespass or other occurrence - excluding hail damage - to the extent that repairing it for legal operation on the highways exceeds the vehicle's retail fair market value immediately before the damage occurred, as determined by the vehicle owner or the insurance company. These vehicles cannot be transferred on a Dealer's Bill of Sale (DR 2407). BACK TO TOP OF PAGE Mechanic's Lien A garage or mechanic holding a vehicle for a mechanic's or storage lien may make application for title by following the steps in the mechanics and storage hen procedure 38-20-116 C.R.S. BACK TO TOP OF PAGE Possession Documents

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Dealer Plates

New and renewing dealers must submit a Dealer Plate Affidavit to the Dealer Section. Upon verification of the information, the dealership will be mailed an authorization certificate to take to the - county clerk's office to purchase the number of plates allowed. BACK TO TOP OF PAGE Full-Use Plates BACK TO TOP OF PAGE Demonstration Plates BACK TO TOP OF PAGE Rules Governing Dealer Demonstration Plate Use Demo plates cannot be loaned to charitable organizations for use in charitable activities or parades. Also, they cannot be loaned or given to any athlete, coach, celebrity, accountant or lawyer other than for the purpose of a test drive. Dealer demo plates cannot be displayed on vehicles that are used by the dealership for any commercial purpose. Such commercial vehicles shall be titled and registered in the name of the dealership. Commercial vehicles shall include, but not be limited to: delivery vehicles, tow vehicles, vehicles with signs advertising the dealership, and service loaners. BACK TO TOP OF PAGE In-Transit Plates BACK TO TOP OF PAGE Depot Plates BACK TO TOP OF PAGE Temporary Registration Permits It is not necessary to have a valid driver's license to purchase a vehicle. However, any person driving the vehicle from the dealer's lot must have a valid driver's license. Temporary registration permits feature a 3-part registration stub that must be completed by the dealer and distributed as follows: 2. The white copy is mailed on the date of issuance to the Traffic Records Section, Motor Vehicle Division, 1881 Pierce St., Lakewood, CO 80214 3. The yellow copy must be retained by the dealer. Temporary registration permits are serially numbered and charged to the purchasing dealer. Dealers shall not loan, give, borrow, sell, exchange or issue permits for or with another dealer, individual, business, company or corporation.

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Return Registration and Plates to Customers

Dealers and salespeople are reminded that when they take a vehicle in on trade, they are to return the registration and plates to the customer. The plates are the property of the owner and do not transfer with the vehicle. A customer registering a new vehicle may receive some credit for the old plate and registration. Not only will customers want credit for their old plates, they may need the registration as proof of ownership taxes paid for their income tax records. BACK TO TOP OF PAGE Truth In Mileage Act Congress enacted the federal odometer law in 1972 to prohibit tampering with odometers and to establish safeguards for the protection of consumers. In 1986, the Truth in Mileage Act enhanced the paper trail of odometer readings by requiring an odometer disclosure upon each transfer of title of a motor vehicle. This also includes motor vehicle lessors and auctions. Records of vehicle transfers and odometer statements must be retained for 5 years. This federal law makes it unlawful for any person: 1. To advertise for sale, sell, use, install or have installed, any device that causes an odometer to register an inaccurate mileage. 2.To disconnect an odometer. 3.To reset or alter the odometer of any motor vehicle with intent to change the mileage. 6. To fail to issue a disclosure statement or to issue a false statement. 7. If a dealer or distributor fails to receive a complete mileage disclosure statement. The following types of motor vehicles are exempt from the Truth in Mileage Act: BACK TO TOP OF PAGE A Secure Power of Attorney Form The DR 2174 may be used in cases where the original title has been lost or the lien needs to be released on a trade-in by the seller. This document permits the buying dealer to gain a duplicate title without having to re-contact the original owner for a mileage affidavit. BACK TO TOP OF PAGE Cash Reporting Rule BACK TO TOP OF PAGE Canceling A Contract Within 72 Hours BACK TO TOP OF PAGE "As Is" and "Tow Away' The term 'as-is' should not be confused with the term 'tow away.' 'Tow away' is a very specific term reserved for motor vehicles that cannot pass state safety standards. Such vehicles must be sold as 'tow away.' Dealers cannot issue temporary permits for 'tow away' vehicles or allow them to be driven off the dealership's premises. Moreover, dealers must indicate on the buyer's order the extent of the vehicle's safety problems to bring them to the attention of the certified law enforcement VIN inspector in subsequent roadworthiness inspections. BACK TO TOP OF PAGE Deceptive Trade Practices While dealers, wholesalers and salespersons should be familiar with the entire Consumer Protection Act, several sections of that Act are especially relevant to the motor vehicle industry. First and foremost among the deceptive trade practices is 'bait and switch," which is discussed in detail in Part IV. In addition to bait and switch, the following deceptive practices are also worth relating: 1. Representing goods as original or new 'when it is known, or should be known, that they are deteriorated, altered, reconditioned, reclaimed, used, or secondhand. 2. Advertising goods, services, or property with intent not to sell them as advertised. 6. Failing, in connection with any solicitation, to clearly and prominently disclose immediately adjacent to the description of any item or prize received by any person the actual retail value of each item or prize to be awarded. The actual retail value is the price at witch substantial sales of the item were made in the trade area within the last 90 days, or if no substantial sales were made, the actual cost of the item or prize. Whenever the actual cost is less than fifteen dollars per item, a disclosure that actual cost to the provider is less than $15.00 must be provided. 7. Refusing or failing to obtain all government licenses or permits (see discussion on unlicensed dealers at end of this section). BACK TO TOP OF PAGE Disclosures Required Part of the contract for the retail sale or lease of a motor vehicle, other than a retail installment sales contract subject to the Uniform Commercial Credit Code, must include either the Disclosures Required As Part of a Motor Vehicle Sales Contract or disclosures required by the Federal Reserve Board's Regulation M. The disclosures are to be given to the buyer or lessee at the time the sale or lease is completed. Board regulations require dealers, wholesalers and auction dealers to disclose on the contract form when a motor vehicle is known by the dealer, wholesaler or auction dealer to be a salvage vehicle. This requirement can be satisfied by using a 'Rebuilt From Salvage Disclosure" affidavit (DR 2710). Disclosure must also be made when it is known that a vehicle is to have sustained material damage at any one time from any one incident. BACK TO TOP OF PAGE Emissions

Ten Colorado counties make up the Automobile Inspection and Re-adjustment (AIR) Program area in Colorado: Adams, Arapahoe, Bolder, Denver, Douglas, El Paso, Jefferson, Larimer, Pitkin and Weld.

New vehicles sold on an MCO or MSO are exempt from emission testing requirements for the first 4 model years or until there is a change in ownership, except for diesel powered vehicles which have a 2-year exemption. However, these new vehicles are still required to have an emissions window sticker except for diesel powered vehicles. As of October 1, 1994, before delivering new vehicles to buyers within the AIR program area, dealers must have an 'exempt' emissions sticker affixed to the vehicle's windshield. 1982 model year and newer vehicles are to be tested every 2 years. 1981 and older model years vehicles are to be tested yearly.

-The seller does not warrant that the vehicle will comply with the emissions requirements.

-The purchaser is responsible for complying with the emissions requirements prior to registering the vehicle. BACK TO TOP OF PAGE Financing Approval BACK TO TOP OF PAGE Colorado Lemon Law If a new vehicle has a defect that substantially impairs its use and market value within one year following purchase, and the defect is not repaired after a .reasonable number of attempts,' a court may order the manufacturer to replace the vehicle or refund the purchase price less a reasonable allowance for use of the vehicle. Under law, a 'reasonable number of attempts' to repair applies when the same defect exists after it has been subject to repair four or more times within the first year after the date of original delivery. It also applies when the vehicle is out of service for repairs for a cumulative total of 30 or more business days during the warranty term or one year after purchase, whichever comes first. Defects, such as rattles or squeaks, which do not substantially impair the use and market value of the vehicle are not covered. Also, defects that result from abuse, neglect or unauthorized modifications or alterations of the vehicle by a consumer are not covered. Prior to suing a manufacturer for a refund or a replacement vehicle, the consumer must first send a written notice of defect by certified mail to the manufacturer giving them a chance to repair it and go through the manufacturer's consumer arbitration program, if one exists.

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Motor Vehicle Repair Act

This law deals with the issues of consumers and motor vehicle repair. Most retail dealers that perform repairs are subject to this Act. Only repairs promised as part of the sale of a motor vehicle fall under the jurisdiction of the Dealer Section. Filing a complaint when repairs are not associated with the sale of a vehicle is done at the District Attorney's office in the county in which the repairs were made. BACK TO TOP OF PAGE Repossession The complex laws concerning repossession apply to both vehicle sales and leases. A creditor does not automatically have the right to repossess a vehicle upon default by a consumer in a credit transaction. The creditor needs to create a security interest in the motor vehicle by filing a lien on the vehicle in the county where the debtor resides. Ten days after a debtor has failed to make the required payment, he or she is considered to be in default. The creditor is required by law to give the debtor a written right to cure notice, which can either be delivered or mailed to the debtor's residence. Sending the right to cure notice by regular mail and obtaining a certificate of mailing from the post office is recommended in order to document the date it was sent.

The right to cure notice must state the name, address and telephone number of the creditor, a brief description of the credit transaction, the debtor's right to cure the default, the amount of payment and the date by which the payment must be made to cure the default. The debtor has 20 days in which to cure the default. The creditor cannot accelerate the maturity of the unpaid balance or repossess during this period. If the debtor cures the default within 20 days, the debtor's rights are restored under the agreement as though no default had occurred. If the debtor does not respond, the creditor may then move to repossess. Only one right to cure notice is required in a 12-month period.

Local law enforcement agencies must be notified within one hour before or after the repossession occurs. Dealers should ensure that their repossessors are bonded through the State Attorney General's office. Employing an unbonded repossessor may make the dealer liable for the actions of the repossessor. BACK TO TOP OF PAGE Sunday Closing Law No dealer or employee shall keep open or operate, or assist in keeping open or operating, any premise, open or closed, for the purpose of selling, bartering or exchanging or offering for sale, barter, or exchange any motor vehicle, whether new, used or secondhand, on the first day of the week commonly known as Sunday. This law does not apply to the following: -The opening of an establishment or place of business for other purposes, such as the sale of petroleum products, tires, automobile accessories, or BACK TO TOP OF PAGE Unlicensed Dealer or Salesperson It is unlawful for any person to act as a new or used vehicle dealer, wholesaler, motor vehicle auction dealer, or salesperson unless that person has been licensed as such.

Any person who willfully violates this law commits a class 3 misdemeanor, and upon conviction, shall be punished by a fine of up to $2,500 for each vehicle sold. The Consumer Protection Act also states that failure to obtain all government licenses, or permits required to perform the services or to sell the property, is a deceptive trade practice.

The information presented here is intended to be used as a. guide. While every effort has been made to make the information in this manual accurate and helpful , it is not intended to be a substitute for the statutes and regulations or other legal documents.

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 Last modified: Monday January 18, 2010.